A new report from MSCI shows that many listed companies are still not aligned with the world’s most ambitious climate goal. The findings suggest that progress is uneven. Some companies are moving in the right direction. Many are not yet cutting emissions fast enough.
According to MSCI’s latest Transition Finance Tracker, about 38% of companies in the MSCI All Country World Investable Market Index (ACWI IMI) have emissions trajectories that are aligned with limiting global warming to 2°C or below. This includes 12% aligned with 1.5°C or less and 26% aligned between 1.5°C and 2°C.
However, only about 12% of companies are aligned with the stricter 1.5°C goal set under the Paris Agreement. The remaining companies are on pathways that imply warming above 2°C.
In fact, 36% of companies fall in the range above 2°C but below 3.2°C, while 26% exceed 3.2°C. Overall, the median listed company trajectory implies 3°C (5.4°F) of warming above preindustrial levels this century.

MSCI uses a tool called the Implied Temperature Rise (ITR) metric. This tool estimates how much global temperatures would rise if the whole economy followed the same emissions pathway as a given company. It looks at aggregate emissions, sector-specific carbon budgets, and corporate climate targets.
Inside the ITR: Measuring Corporate Warming Impact
MSCI’s ITR metric helps investors understand climate risk. It compares a company’s projected emissions with global carbon budgets that align with temperature goals. The dataset used in this estimate covers roughly 95% of ACWI IMI constituents, as about 5% lack sufficient data for the calculation.
If a company’s emissions plan fits within a 1.5°C carbon budget, it is considered aligned with the most ambitious Paris goal. If it fits within a 2°C budget, it is considered moderately aligned. If not, it implies higher warming.
- The Paris Agreement aims to limit global warming to well below 2°C, and preferably to 1.5°C, compared with pre-industrial levels.
The Intergovernmental Panel on Climate Change (IPCC) has warned that global emissions must fall by about 43% by 2030, compared with 2019 levels, to keep 1.5°C within reach.
MSCI’s data shows that most companies are not reducing emissions at that pace. The report also notes that its latest warming estimate is three-tenths of a degree higher than the previous quarter due to a methodological update that removed a cap on how much companies could exceed their carbon budgets.
This gap matters because corporate emissions play a major role in global totals. The MSCI ACWI IMI includes 8,225 companies and captures about 99% of the global equity investment opportunity set as of Dec. 31, 2025.
Winners and Laggards: How Sectors Stack Up on Climate
The Transition Pathway Initiative (TPI) gives a clear look at how corporate climate performance differs by industry.
The TPI report looked at more than 2,000 major companies. These companies have a total market value of about US$87 trillion. The focus was on their climate governance and progress on emissions. It found that 98% of companies lack credible plans to shift capital away from carbon-intensive assets.

The report warns that 554 companies in 12 high-emitting sectors are on a dangerous path. Their current emissions are on track to overshoot the 1.5°C carbon budget by 61% between 2020 and 2050. These same pathways will also likely exceed the 2°C budget by 13% during that same period.
The analysis suggests that many firms consider climate issues in daily decisions. However, few have solid long-term transition plans.
TPI also shows clear differences in sector progress. For example, automotive and electricity companies reduced emissions intensity nearly five times faster between 2020 and 2023 than cement and steel firms. Conversely, sectors such as oil & gas, aluminum, and coal mining remain among the most misaligned with Paris goals.
This highlights that while some industries are beginning to cut emissions and improve governance, most still need stronger transition plans and clearer capital alignment to meet global climate targets.
Climate Alignment Is Now a Financial Risk Indicator
Findings reveal that climate alignment is not only an environmental issue. It is also a financial one.
Governments are tightening climate policies. Carbon pricing systems now cover about 23% of global greenhouse gas emissions, according to the World Bank’s State and Trends of Carbon Pricing report.
More countries are setting net-zero targets. Regulations are increasing disclosure requirements. Investors face growing pressure to measure climate risk in portfolios.
The MSCI report also shows that 19% of listed companies had a climate target validated by the Science Based Targets initiative (SBTi) as of Dec. 31, 2025, up from 14% a year earlier. Meanwhile, 32% of companies have set a companywide net-zero target, and 60% have published some form of climate commitment.
Companies that are not aligned with global climate goals may face higher regulatory costs, stranded assets, or weaker demand in the future. On the other hand, companies aligned with 1.5°C or 2°C pathways may benefit from new markets and lower transition risk.
MSCI’s data helps investors compare companies on this basis. The 38% alignment figure gives a broad snapshot of progress across global markets.
Progress, But Not Fast Enough
The fact that 38% of companies align with 2°C or below shows improvement compared with past years. Corporate climate reporting has expanded. More companies now set net-zero targets, and many publish science-based targets.
Disclosure rates have also improved. As of Dec. 31, 2024, 79% of listed companies disclosed Scope 1 and/or Scope 2 emissions, up from 76% a year earlier. A majority, 56%, reported at least some Scope 3 emissions, up from 51%.

Still, MSCI’s findings show that ambition and action are not always the same. Some companies set long-term targets but delay near-term reductions. Others rely heavily on carbon offsets instead of direct emissions cuts. In some cases, emissions intensity improves while absolute emissions remain high.
The IPCC has made clear that global emissions must fall sharply this decade. Delayed action increases future costs and transition risks.
A Fossil-Fuel-Heavy World Complicates the Shift
Global energy-related CO₂ emissions reached a record 37.8 billion tonnes in 2023, according to the International Energy Agency. While renewable energy growth has accelerated, fossil fuels still account for around 80% of global primary energy supply.
These global figures explain why corporate alignment remains challenging. Many companies operate in economies that still depend on fossil energy.
MSCI’s report reflects this broader reality. Corporate alignment depends on system-wide change, not just company-level pledges. Moreover, the report’s findings come as corporate climate pledges continue to rise sharply.
According to the SBTi, the number of companies setting both near-term and net-zero science-based targets surged 227% between late 2023 and mid-2025. Companies setting near-term targets alone grew by nearly 97% over the same period.

By the end of 2023, only 17% of companies with validated targets had both near-term and net-zero commitments. That share rose to 33% in 2024 and reached 38% by mid-2025.
The figures show that more companies are formalizing climate commitments. However, MSCI’s data indicates that only 12% of listed firms align with 1.5°C, while 38% align with 2°C or below — highlighting a gap between target-setting and full emissions alignment.
The Road Ahead: Bridging the 1.5°C Gap
The headline figure shows that more than one-third of listed firms are moving in a direction consistent with global climate goals. That gap is significant.
To meet the Paris Agreement’s goals, alignment will need to increase quickly across all sectors. This means faster emissions cuts, clearer short-term targets, and stronger capital allocation toward low-carbon technologies. Today’s alignment rate suggests progress is underway, but it also shows that most companies still have to work harder to be on track to a 1.5°C path.
The post Climate Reality Check: Only 12% of Global Companies Align With 1.5°C Goal, MSCI Reports appeared first on Carbon Credits.
Carbon Footprint
Philippines Taps Blue Carbon and Biodiversity Credits to Protect Coasts and Climate
The Philippines is stepping up efforts to protect its coastal ecosystems. The government recently advanced its National Blue Carbon Action Partnership (NBCAP) Roadmap. This plan aims to conserve and restore mangroves, seagrass beds, and tidal marshes. It also explores biodiversity credits — a new market linked to nature conservation.
Blue carbon refers to the carbon stored in coastal and marine ecosystems. These habitats can hold large amounts of carbon in plants and soil. Mangroves, for example, store carbon at much higher rates than many land forests. Protecting them reduces greenhouse gases in the atmosphere.
Biodiversity credits are a related concept. They reward actions that protect or restore species and ecosystems. They work alongside carbon credits but focus more on ecosystem health and species diversity. Markets for biodiversity credits are being discussed globally as a complement to carbon markets.
Why the Philippines Is Targeting Blue Carbon
The Philippines is rich in coastal ecosystems. It has more than 327,000 hectares of mangroves along its shores. These areas protect coastlines from storms, support fisheries, and store carbon.
Mangroves and seagrasses also support high levels of biodiversity. Many fish, birds, and marine species depend on these habitats. Restoring these ecosystems helps conserve species and supports local food systems.
The NBCAP Roadmap was handed over to the Department of Environment and Natural Resources (DENR) during the Philippine Mangrove Conference 2026. The roadmap is a strategy to protect blue carbon ecosystems while linking them to climate goals and local livelihoods.
DENR Undersecretary, Atty. Analiza Rebuelta-Teh, remarked during the turnover:
“This Roadmap reflects the Philippines’ strong commitment to advancing blue carbon accounting and delivering tangible impact for coastal communities.”
Edwina Garchitorena, country director of ZSL Philippines, which will oversee its implementation, also commented:
“The handover of the NBCAP Roadmap to the DENR represents a turning point in advancing blue carbon action and strengthening the Philippines’ leadership in coastal conservation in the region.”
The plan highlights four main pillars:
- Science, technology, and innovation.
- Policy and governance.
- Communication and community engagement.
- Finance and sustainable livelihoods.
These pillars aim to strengthen coastal resilience, support community well‑being, and align blue carbon action with national climate commitments.
What Blue Carbon Credits Could Mean for Markets
Globally, blue carbon markets are growing. These markets allow coastal restoration projects to sell carbon credits. Projects that preserve or restore mangroves, seagrass meadows, and tidal marshes can generate credits. Buyers pay for these credits to offset emissions.
According to Grand View Research, the global blue carbon market was valued at US$2.42 million in 2025. It is projected to reach US$14.79 million by 2033, growing at a compound annual growth rate (CAGR) of almost 25%.

The Asia Pacific region led the market in 2025, with 39% of global revenue, due to its extensive coastal ecosystems and government support. Within the market, mangroves accounted for 68% of revenue, reflecting their high carbon storage capacity.
Blue carbon credits belong to the voluntary carbon market. Companies purchase these credits to offset emissions they can’t eliminate right now. Buyers are often motivated by sustainability goals and environmental, social, and corporate governance (ESG) standards.
Experts at the UN Environment Programme say these blue habitats can capture carbon 4x faster than forests:

Why Biodiversity Credits Matter: Rewarding Species, Strengthening Ecosystems
Carbon credits aim to cut greenhouse gases. In contrast, biodiversity credits focus on saving species and habitats. These credits reward projects that improve ecosystem health and may be used alongside carbon markets to attract finance for nature.
Biodiversity credits are particularly relevant in the Philippines, one of 17 megadiverse countries. The nation is home to thousands of unique plant and animal species. Supporting biodiversity through market mechanisms can strengthen conservation efforts while also supporting local communities.
Globally, biodiversity credit markets are still developing. Organizations such as the Biodiversity Credit Alliance are creating standards to ensure transparency, equity, and measurable outcomes. They want to link private investment to good environmental outcomes. They also respect the rights of local communities and indigenous peoples.
These markets complement carbon markets. They can support conservation efforts. This boosts ecosystem resilience and protects species while also capturing carbon.
Together with blue carbon credits, they form part of a broader nature-based solution to climate change and biodiversity loss. A report by the Ecosystem Marketplace estimates the potential carbon abatement for every type of blue carbon solution by 2050.

Science, Policy, and Funding: The Roadblocks Ahead
Building blue carbon and biodiversity credit markets is not easy. There are several challenges ahead for the Philippines.
One key challenge is measurement and verification. To sell carbon or biodiversity credits, projects must prove they deliver real and measurable benefits. This requires science‑based methods and monitoring systems.
Another challenge is finance. Case studies reveal that creating a blue carbon action roadmap in the Philippines may need around US$1 million. This funding will help set up essential systems and support initial actions.
Policy frameworks are also needed. Laws and rules must support credit issuance, protect local rights, and ensure fair sharing of benefits. Coordination across government agencies, local communities, and investors will be important.
Stakeholder engagement is key. The NBCAP Roadmap and related forums involve scientists, policymakers, civil society, and private sector partners. This teamwork approach makes sure actions are based on science, inclusive, and fair in the long run.
Looking Ahead: Coastal Conservation as Climate Strategy
Blue carbon and biodiversity credits could provide multiple benefits for the Philippines. Protecting and restoring coastal habitats reduces greenhouse gases, conserves species, and supports local economies. Coastal ecosystems also provide natural defenses against storms and rising seas.
If blue carbon and biodiversity credit markets grow, they could fund coastal conservation at scale while supporting global climate targets. Biodiversity credits could further enhance ecosystem protection by linking nature’s intrinsic value to market mechanisms.
The market also involves climate finance and corporate buyers looking for quality credits. Additionally, international development partners focused on coastal resilience may join in.
For the Philippines, the next few years will be critical. Implementing the NBCAP roadmap, establishing credit systems, and strengthening governance could unlock new opportunities for climate action, sustainable development, and regional leadership in blue carbon finance.
The post Philippines Taps Blue Carbon and Biodiversity Credits to Protect Coasts and Climate appeared first on Carbon Credits.
Carbon Footprint
Global EV Sales Set to Hit 50% by 2030 Amid Oil Shock While CATL Leads Batteries
The global electric vehicle (EV) market is gaining speed again. A sharp rise in oil prices, triggered by the recent U.S.–Iran conflict in early 2026, has changed how consumers think about fuel and mobility. What looked like a slow market just months ago is now showing strong signs of recovery.
According to SNE Research’s latest report, this sudden shift in energy markets is pushing EV adoption faster than expected. Rising gasoline costs and uncertainty about future oil supply are driving buyers toward electric cars. As a result, the EV transition is no longer gradual—it is accelerating.
Oil Price Shock Changes Consumer Behavior
The conflict in the Middle East sent oil markets into turmoil. Gasoline prices jumped quickly, rising from around 1,600–1,700 KRW per liter to as high as 2,200 KRW. This sudden spike acted as a wake-up call for many drivers.
Consumers who once hesitated to switch to EVs are now rethinking their choices. High and unstable fuel prices have made traditional gasoline vehicles less attractive. At the same time, EVs now look more cost-effective and reliable over the long term.
SNE Research noted that even if oil prices stabilize later, the fear of future spikes will remain. This uncertainty is a key driver behind early EV adoption. People no longer want to depend on volatile fuel markets.
EV Growth Forecasts Get a Major Boost
SNE Research has revised its global EV outlook. The firm now expects faster adoption across the decade.
- EV market penetration is projected to reach 29% in 2026, up from an earlier estimate of 27%.
- By 2027, the share could jump to 35%, instead of the previously expected 30%.
- Most importantly, EVs are now expected to cross 50% of new car sales by 2030, earlier than prior forecasts.
The post Global EV Sales Set to Hit 50% by 2030 Amid Oil Shock While CATL Leads Batteries appeared first on Carbon Credits.
Carbon Footprint
AI Data Centers Power Crisis: Massive Energy Demand Threatens Emissions Targets and Latest Delays Signal Market Shift
The rapid growth of artificial intelligence (AI) is creating a new challenge for global energy systems. AI data centers now require far more electricity than traditional computing facilities. This surge in demand is putting pressure on power grids and raising concerns about whether climate targets can still be met.
Large AI data centers typically need 100 to 300 megawatts (MW) of continuous power. In contrast, conventional data centers use around 10-50 MW. This makes AI facilities up to 10x more energy-intensive, depending on the scale and workload.
AI Data Centers Are Driving a Sharp Rise in Power Demand
The increase is happening quickly. The International Energy Agency estimates that global data center electricity use reached about 415 terawatt-hours (TWh) in 2024. That number could rise to more than 1,000 TWh by 2026, largely driven by AI applications such as machine learning, cloud computing, and generative models. 
At that level, data centers would consume as much electricity as an entire mid-sized country like Japan.
In the United States, the impact is also growing. Data centers could account for 6% to 8% of total electricity demand by 2030, based on utility projections and grid operator estimates. AI is expected to drive most of that increase as companies continue to scale infrastructure to support new applications.
Training large AI models is especially energy-intensive. Some estimates say an advanced model can use millions of kilowatt-hours (kWh) just for training. For instance, training GPT-3 needs roughly 1.287 million kWh, and Google’s PaLM at about 3.4 million kWh. Analytical estimates suggest training newer models like GPT-4 may require between 50 million and over 100 million kWh.
That is equal to the annual electricity use of hundreds of households. When combined with ongoing usage, known as inference, total energy consumption rises even further.

This rapid growth is creating a gap between electricity demand and available supply. It is also raising questions about how the technology sector can expand while staying aligned with global climate goals.
The Grid Bottleneck: Why Data Centers Are Waiting Years for Power
Power demand from AI is rising faster than grid infrastructure can support. Utilities in key regions are now facing a surge in interconnection requests from technology companies building new data centers.
This has led to delays in several major projects. In many cases, developers must wait years before they can secure enough electricity to operate. These delays are becoming more common in established tech hubs where grid capacity is already stretched.
The main constraints include:
- Limited transmission capacity in high-demand areas,
- Slow grid upgrades and long permitting timelines, and
- Regulatory systems not designed for AI-scale demand.
Grid stability is another concern. AI data centers require constant and uninterrupted power. Even short disruptions can affect performance and reliability. This makes it more difficult for utilities to balance supply and demand, especially during peak periods.
In some regions, utilities are struggling to manage the size and concentration of new loads. A single large data center can use as much electricity as a small city. When several projects are planned in the same area, the pressure on local infrastructure increases significantly.
As a result, some companies are rethinking their expansion strategies. Projects may be delayed, scaled down, or moved to new locations where energy is more accessible. These shifts could slow the pace of AI deployment, at least in the short term.
Renewable Energy Growth Faces a Reality Check
Technology companies have made strong commitments to clean energy. Many aim to power their operations with 100% renewable electricity. This is part of their larger environmental, social, and governance (ESG) goals.
For example, Microsoft plans to become carbon negative by 2030, meaning it will remove more carbon than it emits. Google is targeting 24/7 carbon-free energy by 2030, which goes beyond annual matching to ensure clean power is used at all times. Amazon has committed to reaching net-zero carbon emissions by 2040 under its Climate Pledge.
Despite these targets, AI data centers present a difficult challenge. They need reliable electricity around the clock, while renewable energy sources such as wind and solar are not always available. Output can vary depending on weather conditions and time of day.
To maintain stable operations, many facilities rely on a mix of energy sources. This often includes grid electricity, which may still be partly generated from fossil fuels. In some cases, natural gas backup systems are used more frequently than planned.
Battery storage can help balance supply and demand. However, long-duration storage remains expensive and is not yet widely deployed at the scale needed for large AI facilities. This creates both technical and financial barriers.
Thus, there is a growing gap between corporate clean energy goals and real-world energy use. Closing that gap will require faster deployment of renewable energy, improved storage solutions, and more flexible grid systems.
Carbon Credits Use Surge as Tech Tries to Close the Emissions Gap
The mismatch between AI growth and clean energy supply is also affecting carbon markets. Many technology companies are increasing their use of carbon credits to offset emissions linked to data center operations.
According to the World Bank’s State and Trends of Carbon Pricing 2025, carbon pricing now covers over 28% of global emissions. But carbon prices vary widely—from under $10 per ton in some systems to over $100 per ton in stricter markets. This gap is pushing companies toward voluntary carbon markets.

The Ecosystem Marketplace report shows rising demand for high-quality credits, especially carbon removal rather than avoidance credits. But supply is still limited.
Costs are especially high for engineered removals. The IEA estimates that direct air capture (DAC) costs today range from about $600 to over $1,000 per ton of CO₂. It may fall to $100–$300 per ton in the future, but supply is still very small.
Companies are focusing on credits that:
- Deliver verified emissions reductions,
- Support long-term carbon removal, and
- Align with ESG and net-zero commitments.
At the same time, many firms are taking a more active role in energy development. Instead of relying only on offsets, they are investing directly in renewable energy projects. This includes funding new solar and wind farms, as well as entering long-term power purchase agreements.
These investments help secure a dedicated clean energy supply. They also reduce long-term exposure to carbon markets, which can be volatile and subject to changing standards.
Companies Are Adapting Their Energy Strategies: The New AI Energy Playbook
AI companies are changing how they design and operate data centers to manage rising energy demand. Here are some of the key strategies:
- Energy efficiency improvements (new hardware and cooling systems) that reduce data center power use.
- More efficient AI chips, specialized processors, that drive performance gains.
- Advanced cooling systems that cut energy waste and can help cut total power use per workload by 20% to 40%.
- Data center location strategy is shifting, where facilities are built in regions with stronger renewable energy access.
- Infrastructure is becoming more distributed, where firms deploy smaller data centers across multiple locations to balance demand and improve resilience.
- Long-term renewable energy contracts are expanding, which helps companies secure power at stable prices.
A Turning Point for Energy and Climate Goals
The rise of AI is creating both risks and opportunities for the global energy transition. In the short term, increased electricity demand could lead to higher emissions if fossil fuels are used to fill supply gaps.
At the same time, AI is driving major investment in clean energy and infrastructure. The long-term outcome will depend on how quickly clean energy systems can scale.
If renewable supply, storage, and grid capacity keep pace with AI growth, the technology sector could help accelerate the shift to a low-carbon economy. If progress is too slow, however, AI could become a major new source of emissions.
Either way, AI is now a central force shaping global energy demand, infrastructure investment, and the future of carbon markets.
The post AI Data Centers Power Crisis: Massive Energy Demand Threatens Emissions Targets and Latest Delays Signal Market Shift appeared first on Carbon Credits.
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